The Japanese Financial Services Agency (JFSA) hit Mizuho Bank Co Ltd with an order to clean up its compliance act, back in September, in connection to loans made to ‘anti-social forces.’ That’s the regulator’s way of describing the organised crime syndicates that control illegal activity in Japan, also known as the Yakuza.
The compliance problems the bank has faced stem from a consumer-credit affiliate firm which was making loans to Yakuza, according to Bloomberg. The bank’s executives had until today – Monday 28th – to submit their improved compliance plan to the JFSA, get it started and then make monthly and quarterly reports to the regulator on their progress.
The order tells Mizuho to tighten up its compliance and legal systems considerably, and specifically to get the following controls in place:
a)Clarifying where management responsibility lies, from the initial occurrence of this problem to the present – ie when and how the first loan was granted and how it slipped through the net.
b)Clarifying management’s approaches to tackling this problem and addressing legal/regulatory compliance – specifically assigning roles and responsibilities and a road map with milestones for achieving compliance targets.
c)Formulating specific measures effective in preventing a recurrence of this problem and establishing bank-wide legal/regulatory compliance (including fostering and ensuring awareness among executives and employees of the importance of legal/regulatory compliance) – a complete re-training exercise which focuses on the culture of compliance would fit well here.
d)Enhancing/strengthening internal control functions – a blank cheque written out to the head of compliance for a system revamp should tick this box.
Impact on the bank
Mizuho made a statement on the homepage of its corporate website saying it takes this order ‘very seriously and deeply regrets these occurrences.’
This news piece from the IBTimes has more details on the loans.
The order specifically targeted four organisations.
The Mexican Los Zetas, the Italian Camorra, the international Brothers’ Circle and the Yakuza. So far, the US Treasury has got its hands on an estimated US$55,000 in Yakuza holdings, AMEX cards to be precise, according to documents acquired by Bloomberg News.
Admittedly, that figure is probably a drop in the ocean compared to what the organised criminal gang could earn, but its a step in the right direction.
- Probe finds Mizuho lax about cleaning up mob loans (news.yahoo.com)
- Mizuho ‘did not’ hide gangster loans (bbc.co.uk)